Cursory look at Malawi in 2015

Honorable Folks, a cursory look at the 2015/16 National Budget shows a shrink both in the recurrent and expenditure sides of it.

That can only mean a further reduction in the provision of public goods and services in quantity, quality or both to a population that’s steadily growing at an annual rate of close to three percent.

The Parliamentary Accounts Committee wants government to explain drastic reductions to various ministries and the consequence to their respective operations in 2014/15.

It appears that in the year when approved funding for government expenditure was adjusted upwards mid-year, the actual funding for operations kept on going down.

Despite the heavy borrowing that IMF fears may soon reach levels when default is inevitable, it appears what actually was spent on various allocations was much less than what Parliament approved.

Will the scenario improve in the new financial year when government has no choice but to cut even on borrowing and try to operate largely on a shrinking local revenue base?

It has to be appreciated that the heavy borrowing went side by side with an accumulation of arrears for suppliers estimated at K155billion for which interest alone is well over K50 billion and growing.

Business captains also lament that government failure to pay suppliers has a crippling effect on the private sector, the so-called engine for economic growth from which MRA collects no less than 50 percent of its tax revenue.

Another big puzzle is on the funding of government’s pet-project-Fisp (Farm Input Subsidy Programme). Treasury has allocated a meagre K40 billion from

K59 billion last year to this project without reducing the number of beneficiaries which still remains at 1.5 million.

The Minister of Finance could not explain, as he was presenting the budget Friday last week, where the shortfall would come from but as the MPs scrutinise the budget in their committees, they’ll probably understand why Gondwe described it weeks before the presentation in the August House as a hard-to-sell “intellectual budget”.

If the shortfall would be borne by the beneficiaries, most likely the majority of them won’t be those that have been targeted in the past whose only contribution was K500. Rather, it’ll be folks in gainful employment who would afford the hiked subsidised price and the palm-oiling of corrupt officials at distribution centres.

In a year of food shortage due to a double-whammy of floods and drought, a change in Fisp dynamics may bring efficiency in the production of food crops (since the fertiliser will be in the hands of a more productive part of the population) but the cost for it would be the enhanced vulnerability of the sector that has both feet in the category of the poorest of the poor.

These may have to depend on relief all the way from one harvest season to the next. Another hidden cost would probably be the vote. There is no denying that the real reason for making the poor buy a K16 000 bag of fertiliser at K500 was in anticipation of their appreciation at the polling centre.

Which brings me to another puzzle I see when I take a cursory look at the political landscape. Does APM, supported by a legion of advisors, seriously believe he can still retain his loyal constituency made up of 37 percent of the voters or, better still, build on it, by introducing biting economic measures without first endearing himself to the majority who denied him the vote?

So far, what we’ve seen is political offensive that has brought to the government side in Parliament about a dozen UDF MPs. Whether these MPs will also bring their constituents to DPP remains unclear for now and it will be more so when the intellectual budget begins to bite harder.

APM may require a shake-up of similar proportions to the one his brother, Bingu, pulled when he rose on a minority vote in 2004. He managed to win the confidence of the majority who had denied him the vote at the ballot simply by adopting policies that resonated with what the people wanted.

Our economy has been in doldrums ever since donors froze budgetary support after the 2009 elections. Factors that led to the rift with donors included government’s unwillingness to abide by the letter and spirit of agreements it made with the donors.

Although there has all long been donor fatigue, the donors still supported the Malawi economy greatly during Bingu’s first term. Come second term, they were accused of using aid to spread neo-colonialism. Their diplomats here were treated like school children.

APM needs to do more to regain donor support. We definitely need their push so our economy can take off.

He also needs to take more drastic measures to assure donors and the taxpayer alike that days when people joined public service to fleece government of 30 percent of its revenue-as is probably still the case now-are gone.

We can’t continue doing things the usual way and expect growth. n